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131 Cards in this Set
- Front
- Back
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The least expensive option to pay off a 30-year mortgage balance would be A. Convertible term life B. Decreasing term life C. Adjustable term life D. Increasing term life |
B. Decreasing term life |
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Which of the following are premium payments for a universal life policy NOT used for? A. Death benefits B. Cash Value C. Loading costs D. Serperate account investments |
D. Separate account investments |
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What is the automatic continuance of insurance coverage referred to as? A. Renewal B. Reinstatement C. Resumption D. Renovation |
A. Renewal |
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A permanent life insurance policy where the policyowner pays premiums for a specified number of years is called a(n) A. Adjustable policy B. Limited pay policy C. Level term policy D. Variable universal policy |
B. Limited pay policy |
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Decreasing term life insurance is often used to A. Provide retirement funds B. Provide coverage for a home mortgage C. Accumulate cash value D. Provide coverage for estate taxes |
B. Provide coverage for a home mortgage |
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LevelPremium Permanent Insurance Accumulates a reserve that will eventually… A. Equalthe face amount of the policy B. Paya dividend to the policyholder C. Requirethe policy owner to make periodic withdrawals D. Becomelarger than the face amount |
A. Equal the face amount of the policy
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Asingle premium cash value policy can be described as A. Apolicy that is paid up after only one payment B. Apolicy that requires an annual payment C. Apolicy that is guaranteed issue D. Apolicy that covers two or more lives |
A. A policy that is paid up after only one payment. |
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An Interest-Sensitive life insurance policyowner may be able to withdrawal the policy’s cash value interest free. Theprovision that allows this is called A. PartialSurrender B. Subrogation C. AutomaticPremium loan D. AcceleratedDeath Benefit |
A. Partial Surrender.
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Aspouse and child can be added to the primary insured’s coverage as what kind ofrider? A. Dependentterm B. Guaranteedinsurability C. PrimaryTerm D. Familyterm |
D. Family term
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Whichtype of multiple protection policy pays on the death of the last person A. Jointlife policy B. Survivorship C. DualLife Policy D. Multiplelife policy |
B. Survivorship
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Amodified Endowment Contract (MEC) is best described as A. Alife insurance contract which accumulates cash values higher than the IRS willallow B. Anannuity contract which contract was converted from a life insurance contract C. Amodified life contract which enjoys all the tax advantages of whole lifeinsurance D. Alife insurance contract where all withdrawals prior to age are subject to a 10%penalty. |
A. A life insurance contract, which accumulates cash values higher thanthe IRS, will allow.
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Indexwhole life insurance contains a securities component that acts as a(n) A. Hedgeagainst inflation B. Premiumstabilizer C. Meanto lowering taxes on earnings D. Incentiveto purchase more coverage |
A. Hedge against inflation
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Whena decreasing term policy is purchased, it contains a decreasing death benefitand A. Increasingpremiums B. LevelPremiums C. DecreasingPremiums D. VariablePremiums |
Answer: B. Level Premiums
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Alife insurance policy that has premiums fully paid up within a stated timeperiod is called A. Statedpayment insurance B. Limiteduniversal insurance C. Statedmodified insurance D. LimitedPayment insurance |
D. Limited payment insurance
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Thetype of policy which pays on the death of the last person is called A. Jointlife B. Survivorshiplife C. Duallife D. Sharedlife |
B. Survivorship life
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Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)? A. Loan against the cash value B. Policy Withdrawl C. Policy Dividened D. Death benefit |
D. Death benefit
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A single premium cash value policy is best described as A. A policy that is paid up after only one payment b. A policy that only reqiures an annual payment c. A policy that is guaranteed issue D. A policy that covers two or more lives |
A. A policy that is paid up after only one payment
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. How are survivorship life insurance policies helpful in estate planning? A. Provide funds to help fund retirement b. Provide funds to help pay taxes c. Provide for funeral expenses d. Provide tax deductions for premium payments |
B. Provide funds to help pay taxes.
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Variable life insurance and Universal life insurance are very similar. Which of these feaatures are held exclusively by universal life insurnace? A. Policyowner may increase or decrease the premium paymnets B. Policyowner may increase or decrease the face amount C. Policy owner can contribute large sums of money D. Policyowner has the righ to select the investment which will provide the greatest return |
D. Policyowner has the right to select the investment which will provide the greatest return
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Which type of policy combines the flexiblity of a universal life policy with investment choices? A. Adjustable universal life policy B. Flexible universal policy C. Variable universal life policy D. Modified universal life policy |
C. Variable universal life policy
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Which policy feature makes a universal life policy different from a whole life policy? A. A fixed cash value B. A flexible premium Schedule C. A fixed death benefit D. The ability to take out a policy loan |
B. A flexible premium schedule |
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Shawn, Mike, and Dave are brothers who have a $100,000 "First to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds A. Will no longer provide insurance protection B. Will go to Mike's estate C. Will be divided by probate D. Will not be paid until the last brother dies |
: A. Will no longer provide insurance prtection. |
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A securities license is required for a life insurance producer to sell
A. Modified life insurance B. Modified Endownment Contracts (MEC) C. Varible life insurance D. Universal Life Insurance |
C. Variable life insurance |
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A life insurance policy that is subject to a contact interest rate is referred to as A. Adjustable life B. Group Life C. Term life D. Universal Life |
D. Universal life |
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Which of these riders will pay a death benefit if the insured's spouse dies? A. Guaranteed insurability rider B. Family term insurance rider C. Family whole insurance rider D. Payor benefit rider |
B. Family term insurance rider |
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A business will typically use which use which type of life insurance to cover thier employees? A. Group Policy B. Adjustable life policy C. Whole life policy D. Endowment policy |
A. Group Policy
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Which of the following policies does NOT build cash value? A. Term B. Straight Life C. Endowment D. Variable Life |
A. Term
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Under a Modified Endowment Contract, what are the likely tax consequences? A) Interest on policy loans is tax deductible B) Premium payments are tax deductible C) Pre-death distributions will become taxable D) Cash value cannot be surrendered early |
C) Pre-death distributions will become taxable
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A Renewable Term Life insurance policy can be renewed? A. at a predetermined date or age, regardless of the insured's health B. only if the insured provides evidence of insurability C. anytime at the policyowner's request D. typically with no change in premium |
A. at a predetermined date or age, regardless of the insured's health
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Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policies cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this? Increasing term life policy Nonparticipating policy Modified whole life policy Universal life policy |
D. |
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What is a corridor in relation to a Universal Life insurance policy? A. The gap between the total death benefit and the policy's cash value B. The gap between when a claim is filed and when the death benefit is received C. The amount of interest that has accumulated in the policy's cash value D. The point in time when the policy's cash value reaches $0 |
A. The gap between the total death benefit and the policy's cash value
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Which of these describes the result of a modified endowment contract that failed to meet the seven-pay test? A. Policy loans are disallowed B. The premium payments will be tax deductible C. Pre-death distributions are typically taxable D. Withdrawals will be prohibited |
C. Pre-death distributions are typically taxable |
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A renewable Term Life insurance policy allows the policyowner the right to renew the policy A) at anytime the policy chooses B) as many times as the policyowner chooses C) paying the same premium as before the renewal D) without producing proof of insurability |
D) without producing proof of insurability.
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Which policy feature makes a universal life policy different from a whole life policy? A) A fixed cash value B) A flexible premium schedule C) A fixed death benefit D) The ability to take out a policy loan |
: B) A flexible premium schedule
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Whichtype of rider will waive the premium on a child’s life insurance policy if theparent dies? A. Waiverof Premium B. Juvenilewaiver C. Guaranteedinsurability D. PayorBenefit |
D. Payor benefit
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Aprovision that allows a policyowner to temporarily give up ownership right tosecure a loan called a(n) A. Automaticpremium loan B. Nonforfeitureoption C. Collateralassignment D. Irrevocableassignment |
C. Collateral Assignment.
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Ifan insured dies during grace period with no premiums paid A. Thepolicy would be payable, minus the premium amount B. Thepolicy would be payable only after the beneficiary makes past due premiumpayment. C. Allpast premiums will be refunded with interest D. Theclaim would be denied |
A. The policy would be payable, minus the premium amount
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Whatis an insurance policy’s grace period? A. Periodof time the initial premium is paid and before the policy is issued B. Periodof time it takes for policy’s underwriting to complete C. Periodof time after a policy is issued and before it is delivered to policy owner D. Periodof time after the premium is due but the policy remains in force. |
D. Period of time afterthe premium is due but the policy remains in force. |
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Which of these is NOTConsidered to be a nonforfeiture option in a whole life insurance policy? A. Interestonly B. Reducedpaid-up insurance C. Extendedterm insurance D. Cashsurrender |
A. Interest only.
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Insurancepremium is determined by each of the following factors EXCEPT A. Mortality B. Interest C. Expenses D. Liquidity |
D. Liquidity
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Whichof these factors help determine an insured’s life insurance premium? A. Insured’ssalary B. Maritalstatus C. Placeof residence D. Avocation(Hobby) |
D. Avocation (Hobby)
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A beneficiary change canoccur
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C. Normally at any time during the policy term
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Proceeds from a lifeinsurance policy are protected from the beneficiary's creditors by whichclause? |
C.) Spendthrift trust clause
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Purchasing a lifeinsurance policy in order to avoid the forced sale of assets upon death is called? |
D. Estate Conversation
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Mortality is calculated by using a large risk pool of? |
B. People and time
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A policyowner can receive an immediate payment before theinsured dies by using a(n) |
A. Vertical settlement contract
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Over the course of a year, which premium payment mode is mostexpensive? |
A. Monthly
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Which of these is affected by the frequency of an insurancepolicy's premium payments? |
D. Cost
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1. What happens tothe total amount of premium paid for an insurance policy when the paymentfrequency increases? |
C. Increase
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The premium payment modethat results in the highest overall cost would be
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A. Monthly
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1. Which of these isconsidered a major tax advantage of life insurance? |
D. Income tax is typically not owned on proceeds paid directly to a beneficary
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Whichsettlement option involves having the proceeds remain with the insurer andearnings paid on a monthly basis to the beneficiary?
A. interest only B. dividends only C. extended interest D. fixed period |
a. Interest only
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All of these settlement options for lifeinsurance policies except A. Lifeincome B. Lumpsum C. Extendedterm D. Fixedperiod |
C. Extended term
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1. If the beneficiarydies from the same accident as the insured individual, the insurer will proceedas if |
A. the insured outlived the beneficiary
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Whichof the following nursing home option would BEST suit an individual who needssome nursing care and supervision but NOT full-time care? A. Custodialcare homes B. Assistedliving facilities C. Skillednursing facilities D. Congregatehousing |
B. Assisted living facilities.
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Someoneneeding custodial care at home would require which type of coverage? A. Majormedical B. Disability C. Long-termCare D. Medicaid |
C. Long-term care
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Long-termcare policies may provide for claims arising from A. Seniledementia B. Acutecare in hospital C. Alcoholism D. Drugaddition |
A. Senile dementia
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Whichof the following does Meidcare part D cover? A. Intensivecare coverage B. Doctorvisits C. Prescriptiondrugs D. Hospitalcoverage |
C. Prescription drugs
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1. Theopen enrollment period for Medicare supplements begin at age A. 62 B. 65 C. 67 D. 70 |
B. 65
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Along-term care policy typically provides all of the following levels of careEXCEPT a. Skilled b. Intermediatecare c. Acutecare d. CustodialCare |
C. Acute care
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Whichof these gaps in Medicare coverage is addressed with Medicare supplemental insurance? A. Medicare-in-hospitaldeductible B. Dentalwork C. NutritionalSupplements D. Chiropracticcare |
A. Medicare in hospital deductible
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Which of these premium payment frequencies is not typicallyavailable to a policyowner? |
A. Bi-weekly
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Which settlement option involves having the proceeds remain withthe insurer and earnings paid on a monthly basis to the beneficiary? |
A. Interest Only
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Apolicyowner is prohibited from making any changes to the policy without thebeneficiary's written consent under which beneficiary designation?
A. Contingent beneficiary B. Tertiary beneficiary C. Revocable beneficiary D. Irrevocable beneficiary |
d. Irrevocable Beneficary
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How is the cost of a policy affected when a policyowner payspremiums more frequently? |
b. Increases
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Pat is insured with a lifeinsurance policy and Karen is his primary beneficiary. They are both involvedin an automobile accident where Pat dies instantly and Karen dies 5 days later.Which policy provision will protect the rights of the contingent beneficiary toreceive the policy benefits? |
B. Common disaster clause
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Elizabeth is thebeneficiary of a life insurance policy. She is receiving the death benefit inpayments of $10,000 per month until the principal and interest has been paidout. Which option was chosen? |
B. Fixed amount
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Naming a contingent beneficiary as "all surviving children" is described bywhich term? |
c. Class disignation |
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Whichof these factors is NOT taken into consideration when determining the cost of along-term care policy?
Health of applicant Amount of benefits provided Age of applicant Personal income |
D. Personal Income
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Whichof the following provides Medicare supplement policies?
A. Medicare B. Medicaid C. Private insurance companies D. Associations and employers |
C. Private Insurance companies
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A beneficiary has justreceived a claim payment for a life insurance policy. Which of the following isTRUE regarding the federal income tax liability owed? |
C. No federal income tax is owned on life insurance proceeds
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Anexample of naming a beneficiary by class would be
A. "To the children born of my union with NedJackson: David Jackson, Jennifer Jackson, and Scott Jackson" B. "To the child born of my union with Ned Jackson:Scott Jackson" C. "Tothe children born of my union with Ned Jackson" D. "To Ned Jackson" |
C. "To the children born of my union with NED JACKSON"
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A tax-free Section 1035 Exchange of a life insurancepolicy to a different policy is permitted if it occurs
A. in the same state as the original transaction B. within a 12 month period C. from insurer to insurerand no cash is received by the policyowner D. from agent to agent as long as the agents are licensed in the same line |
C. from insurer to insurerand no cash is received by the policyowner |
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1. A policyowner can receive a percentage payment of the deathbenefits prior to death by using what kind of contract? |
A. Viatical settlement agreement
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A life insurance claim which involves a per capita distributionof policy proceeds would be payable to the? |
D. named living primary beneficiaries |
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AMedicare Supplement policy must NOT contain benefits which
A. charge additional premiums B. duplicate Medicare benefits C. cover more than Medicare coverage D. are covered by Worker's Compensation |
B. duplicate Medicare benefits |
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Generallyspeaking, which three levels of care are Long-Term Care policies provided with?
A. Disability, acute care, and hospitalization B. Accident, medical care, and rehabilitation C. Psychological, acute care, and assisted living D. Skilled nursing, intermediate, and custodial care |
D. Skilled nursing, intermediate, and custodial care |
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A Medicare SupplementPolicy is |
C. designed to fill in the gaps of Part A and Part BMedicare |
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Whichof the following is considered to be a point of service (POS) plan?
A) Preferred provider organization B) Managed care plan C) Protected care provider D) Restricted provider organization |
B. Managed care plan
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Which of these characteristics of an applicant is NOT taken intoconsideration when assessing risk for Disability coverage? |
C. Number of Children
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The IRS allows a taxpayerto deduct medical expenses that exceed 7.5% of their adjusted gross income.Which of the following is considered a tax deductible medical expense underthis rule? |
A) Long Term Care insurance premiums |
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Which of these gaps in Medicare coverage is addressed withMedicare Supplemental Insurance? |
A.Medicare in-hospital deductible |
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Tom has a home health care benefit and is confined to his home.Which of these benefits is NOT typically covered? |
B. Full time Nursing Care
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Joe is a Medicare participant who receives his benefits througha Managed Health Care Plan. Which Medicare plan does he have? |
C. Part C
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1. Shirley has a Medigap policy, which is designed to pay costsassociated with |
A. Medicare Part A and B
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Respite care is able to provide |
D. Temporaryrelief to the patient's primary caregiver |
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The purpose of Medicare Supplement Insurance is to address gapsin Medicare coverage, which can include: |
A. Medicare in hospital deductible
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In a Long-Term Care policy, activities of daily living(ADL's) can be each of the following EXCEPT
A. Talking B. Dressing C. Transferring D. Feeding oneself |
A. Talking
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Premiums paid that exceed 7 ½% of an insured'sAdjusted Gross Income (AGI) are tax-deductible when paid for which of thefollowing plans?
A. Accidental Death andDismemberment B. Personal Disability Income plan C. Qualified Long-Term Care plan D. Group disability income plan |
C. QualifiedLong-Term Care plan
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The typicallong-term care insurance policy is designed to provide a minimum of __ year(s)of coverage. |
A. 1
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Which situation wouldqualify an individual for receiving benefits from a qualified long-term carepolicy? |
D. Becoming cognitively impaired (mentallyill) |
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1. Rob has a benefit at work which enables him to defer his currentreceipt of income and have it paid at a later date, when he will probably be ina lower tax bracket. Which benefit fits this description? |
C.Deferred compensation option |
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Which of the following is NOT a federal requirement of aqualified plan? |
B. Employee must beable to make unlimited contributions
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1. Which of the following employers is required to follow ERISAregulations? |
C. A local electricalsupply company with 12 employees
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Which of these statements concerning Traditional IRAs is CORRECT? |
A. Earnings are nottaxable when withdrawn
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An example of a tax-qualified retirement plan would bea(n)
A. equity compensation plan B. defined contribution plan C. executive index plan D. 1035 exchange plan |
B. definedcontribution plan
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How are contributions made to a Roth IRA handled for taxpurposes? |
B. Not tax deductible
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Bill requires some nursing care and supervision butNOT full-time care. Which of these nursing home options would best serve him?
A. Nursing home B. Assisted living C. Congregate housing D. Custodial residence |
B. Assisted living
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Dana is an employee who deposits a percentage of her income intoher individual annuity. Her company also contributes a percentage into aseparate company pension plan. What kind of annuity is this considered? |
A. Qualified retirementannuity |
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How are premiums paid by the insured for personally owneddisability income insurance treated for tax purposes? |
B) not tax deductible |
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An example of a primarycare physician would be a(n) |
A. internist
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1. An inured was injured asan innocent bystander when someone committed a felony. The insurer is |
d) Liable for the loss |
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The gatekeeper's role when used by an HMO is: |
Answer; B. |
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The difference betweenpre-certification and concurrent review is that pre-certification |
Answer D. |
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Lorenzo is self employedwith an S corporation. He is unmarried and had a net profit for the tax year.What are the tax ramifications of his health insurance premiums paid for theyear? |
C. 100%of his health insurance costs can be deducted from his gross income.
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A 10% excise tax is normally applied to an earlywithdrawal from an IRA. According to HIPAA, this tax will not be applied if thewithdrawal is used for medical expenses that exceed ____ of the individual'sadjusted gross income.
5% 6.5% 7.5% 8% |
C. 7.5%
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In which of thefollowing processes will the insurer oversee the insured's hospital stay toconfirm everything is going according to schedule and that the insured will bereleased as planned? |
D. Concurrent review |
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Which of the following is NOT an example of utilization review? |
Answer: B. |
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1. Which of the following typically does NOT provide a form ofmanaged care? |
C. Major medicalindemnity plan
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Whichof the following is a requirement for ANY change in an insurance application?
A) Change must be initialed by the agent B)Change must be initialed by the applicant C) Change must be approved by the insurer D) Change must be the notarized |
B) Change must be initialed bythe applicant |
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Which of the following is considered to be a point of service(POS) plan? |
B) Managed care plan
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Tara the producer is delivering a specified disease insurancepolicy to a new policyowner. Upon delivery, she may be expected to collect allof the following EXCEPT a(n) |
C) modified applicationwith a new signature |
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Bill the producer iscollecting the initial premium on a health policy. Which of the followingstatements is true? |
a) The contract isnot in force without the initial premium being paid
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1. Which of the following statements regardingGroup Disability Income insurance is TRUE? |
B. It provides benefits fornonoccupational illnesses and injuries |
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1. Which of these would NOT be considered apresumptive disability? |
C. Loss of a leg orarm |
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1. Jonas has disability insurance through hisemployer. The employer pays 75% of the premium, and Jonas pays the other 25%.What is Jonas's tax liability for any benefits paid from the disability plan? |
D. Taxes must be paid on 75% of the benefits received |
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1. The waiting period for a disability insurancepolicy |
A. excludes payments for a short-term illness orinjury |
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1. A disability elimination period is bestdescribed as a |
A. time deductible |
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1. What is the purpose of a Disability IncomeBenefit? |
A. Provide money for living expenses
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1. A life insurance policyowner was injured in anautomobile accident which results in a total and permanent disability. Whichrider would pay a monthly amount because of this disability? |
Answer: B. |
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1. What is an insurerrequired to do when faced with an error made under the Misstatement of Ageprovision? a)Cancel the policy b) Payage-corrected benefits c) Payfull benefits as stated in the policy d) Billthe policyowner for back premiums |
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1. Joannehas a $100,000 whole life policy with an accumulated $25,000 of cash value. Shewould like to borrow $15,000 against the cash value. Which of the followingstatements is TRUE? |
A) Net death benefit will be reduced ifthe loan is not repaid |
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1. Mike andIke are 30 year old identical twins. Both are in excellent health. Each brotherpurchases a life policy that has a $750 annual premium. Mike buys a 10-yearrenewable term policy. Ike purchases a whole life policy. All of the followingstatements are true EXCEPT |
D. Mike has the option of using his cash value topurchase a reduced amount of paid-up whole life insurance
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1. In order toactivate the reinstatement clause of a lapsed life insurance policy, theinsured MUST |
B) provide evidence of insurability to the insurer
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1. A disability policyowner is injured and becomestotally disabled. The benefits pay for 2 years, starting from the date of theinjury. What is this time period called? |
C. Benefitperiod |
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1. Chris is an insured bricklayer who severed hisleft hand in an automobile accident. Although his primary duty cannot beperformed, Chris is also a substitute high school teacher. He collects a fulldisability income check every month. How does his policy define totaldisability? |
C. Own occupation |
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1. Which disability policy provision would addressany concerns of the value of the benefits decreasing over time? |
A. Cost of living benefit |
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Coming from an insurance point of view, whichof the following is the main risk associated with disability? |
B. Loss of income |
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1. Loss of income insurance provides |
A. an individual the means to replace wages |
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1. Claims payable to a Disability Income insured,even when the insured can continue to work, are the result of a B.Recurrentdisability |
C.Presumptivedisability |
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An example of a presumptive disability would be
A. a stroke B. deafness C. diabetes D. cancer |
B. deafness
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